Can I layoff an employee?

Ontario’s Employment Standards Act has a definition of a ‘temporary lay-off’ and provides when a “temporary lay-off” becomes a termination. Some of you may be surprised to learn that just because a layoff is defined as temporary by the Employment Standards Act, it can still amount to a constructive dismissal at law. One employer recently learned this lesson the hard way.

Bevilacqua v Gracious Living Corporation

Mr. Bevilacqua worked as a facilities manager for 15 years at Gracious Living Corporation. In September 2014, he was told he was being temporarily laid off, and that he would be recalled three months later in December 2014. Mr. Bevilacqua took the position that he had been constructively dismissed and initiated a wrongful dismissal action. Gracious Living believed it was permitted to place Mr. Bevilacqua on layoff without any prior notice as long as they recalled him before the statutory period of 13 weeks ended. When the employer was served with Mr. Bevilacqua’s Statement of Claim, it indicated to Mr. Bevilacqua that he would  recalled to work on December 15, 2014, the day the statutory period would end.

The Decision

The court held that there must be a provision in the employment contract that contemplates such a layoff. In the absence of such a provision, a temporary lay-off is a constructive dismissal, as it is a repudiation of a fundamental term of the employment contract: to provide work.

Although Mr. Bevilacqua succeeded in arguing that his temporary lay-off was a constructive dismissal, he was only awarded three months’ pay as damages. The court reasoned that Mr. Bevilacqua was only entitled to receive pay for the duration of the layoff, as failure to accept his employer’s recall was a breach of his duty to mitigate his losses.

Lessons to be Learned

1. There is more to employment law than what is set out in the Employment Standards Act. You should always consult an employment lawyer before imposing any changes on your workforce.

2. It is always a good idea to have your employees sign an employment contract before they begin working. In this case, an employment contract that contemplated the possibility of a lay-off could have provided the employer with the explicit right to temporarily lay off the employee.

3. A failure to accept a position on the exact same terms as prior to a dismissal may be considered to be a failure to mitigate, which can reduce a terminated employee’s damages award.

If you have any questions about your legal rights in the workplace, one of our lawyers would be happy to meet with you. Please call 647-204-8107 or email [email protected].